Microsoft buys linkedin : lessons and concerns

The recent acquisition of LinkedIn by Microsoft for $26.2 billion was the biggest news of the last weeks. This move tells us a lot about the industry but also raises some concerns.

Microsoft owns the “employee continuum”

The first thing that must jump out at us is that, today, Microsoft is the only vendor able to support employee’s relational usages from end to end. Either internally with Office 365 or externally with Linkedin, either for strong or weak ties, either for interactions that happen at work or professional interactions that does not happen in the context of work. It’s a move from a vision that used to distinguish between work and private lives to an individual-centric one whatever the context. Microsoft is becoming people-centric and that’s a good thing.

Besides that, Microsoft get his hands on the biggest professional B2B database worldwide. A weapon of choice to serve its ambitions in the CRM field. Like many others I wonder if, for once, Salesforce did not miss the opportunity to acquire THE golden nugget. Maybe they were to busy working on the acquisition of DemandWare, the fact they are the market leaders made them think they did not need it but leaving to competitors the opportunity to close this deal gives Microsoft the opportunity to acquire a weapon Salesforce could have neutralized by buying it itself.

That said, when it comes to acquisitions the nature of the company acquired matters less than what the buyer plans to do with. Microsoft states that LinkedIn will remain an independent company with its own management but that does not mean they won’t develop synergies. When you pay 49% more that the latest market valuation (and even if that’s not a lot compared to how much LinkedIn was valued one year ago) it means that you want 1+1 to equal 3.

Obvious synergies in the field of collaboration and CRM

Two axis look obvious. The first is about the synergies between LinkedIn and Office 365 since taken together the two solutions cover 99% of employee’s social interactions. Managing LinkedIn from Outlook, having one’s LinkedIn activity feed in Yammer or Outlook, sharing one Office document with LinkedIn contacts, using Skype as communication tool within LinkedIn… the possible bridges between the two worlds is a thick as a dictionary. I just hope Microsoft will go further than integration and provide actual interoperability.

Still on the collaboration side, LinkedIn data will be a wonderful learning field for Cortana. The Grail of the agile and collaborative organization is to find the right person with the right skills for a given task of mission. The “perfect match”. That’s the kind of mission Cortana could achieve in the future (find the expert of, build a team for…) but to do so Cortana will have to learn a lot about talent management. LinkedIn data are perfect for such a machine learning program to create the ultimate HR assistant, the one that will help to build successful teams.

No need to be a visionary to see the possible synergies between LinkedIn and Dynamics on the CRM side, starting with Sales Navigator. And the ability to access very qualified data for campaign targeting.

Many benefits for Microsoft enterprise users but also for LinkedIn ones. Besides Microsoft products or functionalities that could improve LinkedIn’s paying offers, we can hope that the Redmond based company will help the social network to fix two things that many users were complaining about. The first is a user experience that used to worsen over time, the second is underperforming targeting. No doubt that Microsoft has the means to help LinkedIn improve on these two points.

Microsoft can compete with Facebook

The rumor of an “enterprise” version of LinkedIn for internal use has been around since 2008. LinkedIn has always denied this possibility and did nothing in that direction. Wrongly ?

Facebook recently made this move with the launch of Facebook at Work. As many observers I was more than skeptical when the announcement was made but after having tried the solution as a end user and helped a couple of organization to achieve the roll out of Facebook at work I changed my mind : it words very well, users love it and the level of participation and engagement is higher than what I used to see on other enterprise social platforms. In my opinion Facebook at Work is a potential threat to Yammer and an adopted and improved version of LinkedIn could help Microsoft to counter the offensive.

Of course the range of usages covered by Yammer is larger than Facebook’s. The first covers nearly everything (engagement, communication, collaboration) while the second is mainly about engagement and communication. But – in my opinion – that’s because Yammer (and most of its competitors) got more complex over time to cover more and more use cases that users find them too complicated for basic use cases. That’s what created an empty space for Facebook at Work that would have struggled to compete with what Yammer was in its early days but can compete with what Yammer is today.

It’s obvious that it’s not the reason why Microsoft acquired LinkedIn. However, I can’t imagine that no one thought about that, even saying “that’s not the purpose but in case we need it we’ll have a way to respond”. Is there a risk of canibalizing their own product ? Of course but canibalizing oneself is always better than being canibalized by a competitor.

So that’s not likely to happen but not unlikely either. Not only because that is not the main idea but because it may already be too late. Nothing will happen before one year, then the LinkedIn user experience will have to be improved and the product adapted to an internal use. Meanwhile Facebook will have worked is way. But it could be a last resort option.

What to expect from Microsoft on the HRIS field ?

Microsoft already has an HCM module in its portfolio (Dynamics AX) even if that’s not their main priority. The module exists and does not leave an empty hole in the product list but is not business critical.

The acquisition of LinkedIn can be a game changer since it make Microsoft become a top 5 HCM vendor overnight. Microsoft now have data, a recruitment solution, the recruiter’s prefered social network, a learning solution (Lynda.com), an advertising solution. There are also the synergies I’ve already mentioned with Cortana. But should we go as far as saying that they’re on they way to make a real move on the HR field and become an HCM leader without having to start with the core HR part ? I’d be cautious.

There’s a huge potential but does Microsoft want to really exploit it ? I don’t think so. It’s a matter of culture and DNA. That’s not their cup of tea. Everything is possible and we saw impressive changes happening since Satya Nadella is in charge but I don’t think this is priority for them. If I were them I would jump at this opportunity but…I’m not them.

Microsoft wont be the scarecrow of your personal data

Las thing we can’t avoid : the fear this acquisition raised regarding the use of LinkedIn user’s personal data by Microsoft.

Let’s be clear: analyzing LinkedIn data can help a business see who and in which fields their competitors are hiring and anticipate their moves, see the prospects they’re focusing on, identify patterns to understand where the industry (and talents) are going. It makes it easier to see the weak signals that show that a competitor is starting to experience hard times and internal issues.

No one can be in denial and refuses to see that Microsoft would gain a competitive advantage from such a scenario, benefitting from an unique market watch and business intelligence weapon. The question must be raised and the risk assessed. And I’m convinced that the risk is equal to zero.

The point is not to know if a business has your data or not. All the big internet players have our data. The point is not either to know if they use it or not : they all use it. The point is to know for the benefit of whom they’re using it and what is the business model.

• some businesses use data for their own benefit (resell, monetization).

Sometimes it’s free for the user, sometimes he pays.

• when it’s free then the user is the product and the clients are brands and even the platform itself. The platform can use the data to deliver a service and make money out of it at the same time.

• when the user pay the platform uses data only to deliver service.

• in some cases both can happen at the same time (for instance premium users on a free platform like LinkedIn.)

We all know from the start how LinkedIn is using our data but its acquisition by Microsoft made people react, some even saying that we should close ou LinkedIn account to escape from Microsoft.

My point : what matters is not platform having our data by how they make money. Focusing too much on GAFAs (and yet Apple’s business model is not on data monetization as it was explained during the latest WWDC) makes us forget that not all players have the same model.

Microsoft makes money by selling software. A company like Microsoft has so big issues with its clients that they can’t afford being suspect of anything. What’s at stake on the enterprise market is so high that they can’t take such risks. When it comes to data privacy you can trust Microsoft, Apple, IBM, SAP, Oracle etc because their business is not based on monetizing people personal data or using them for them own purpose. They simply dont have the same DNA or culture than those we can call data rogues.

The Facebook case is a perfect exemple.We all know how the general public of Facebook works and we accept the rules. It’s free, we are the product. However everything is done to reassure businesses regarding to the enterprise version, Facebook at work, that was designed based on a great maturity and a good understanding of businesses’ fears and constraints. The fact the product is managed in Europe and not in the US may also explain why they took privacy very seriously.

On Facebook at work :

• Of course there’s no ads

• It’s hosted on other servers with absolutely no bridge, connection or relationship with the general public version.

• an administration console allows to manage users, groups and content. The tool integrates with the enterprise directory and its SSO.

• the client (enterprise) owns tha data.

These arguments have already convinced many CIOs around the world and even in the banking industry. You can easily imagine that when your name is Facebook and you’re discussing integration with an IT department you’re presumed guilty and you have to prove you’re serious about data privacy.

That’s an excellent evidence that the business model prevails. One company, two targets, two business models, two way to manage data.

So let’s go back to Microsoft. The only question that’s worth is to know if two models will be able to coexist within the company and my answer is yes. Two entities, two models, two ways to manage data. The limit is not about technology but ethics and old players have a data ethics that is not share by many new ones.

So there’s no use being afraid and closing your Linkedin account. Most of all if, besides that, you’re using gmail. Just be lucid.